15 ms·

I agree. Also, I know it is hip to say that Wall Street is short-sighted, but in reality it is one of the the few fields where people routinely think decades a

by bb2018 6y ago

I agree. Also, I know it is hip to say that Wall Street is short-sighted, but in reality it is one of the the few fields where people routinely think decades at a time. If you run a large pension fund or investment account you were already risk-weighted and if the cash isn't needed for 10+ years you'd much rather own a slice of the world's largest companies ten years from now instead of gold or cash under a mattress.

chiefalchemist 6y ago
It's all about risk vs return. Furthermore, in the current environment of high adversity, and increased scarcity there will eventually be innovations. Some of those will translate into products and profits.
- TAForObvReasons 6y ago
  The problem is perception. Stocks are increasingly seen as a risk-free play, backstopped by a Fed that will take drastic action if prices fall. In that world, why bother innovating? Why bother investing in innovation when the risk-free play has a huge positive expected return?
  - chiefalchemist 6y ago
    Because the Fed isn't there all the time. Under normal circumstances, you can't just sit there. Aside from competition, you won't retain quality employees.
    - hannasanarion 6y ago
      But they are now, and that's what matters. When prices fell the first time, it didn't even take a week before the government passed the largest stimulus ever, 80% of which went to corporations. Investors know that the government will do anything to underwrite their risk.
      - chiefalchemist 6y ago
        Nah. That doesn't guarantee a return. It might mitigate the downside but there's still risk. No one takes on risk to break even. You invest for a return. Stopping a slide yesterday has little to do with getting a return tomorrow. The future. New products. New ideas. Etc. That's where a return comes from. Not the Fed.
        deleted 6y ago
        [deleted]
      - dharma1 6y ago
        The mandate of the fed is to have maximum employment and price stability. With the impact of social distancing to businesses there was no other alternative to protect employment rather than fed buying securities so the govt has funds for fiscal stimulus to prop up employers that might otherwise go bust (and may still). The stimulus is intended to protect jobs and livelihoods, not to react to movements in the stock market (even if the current president seems to think so)
        chiefalchemist 6y ago
        Agreed. The entire exercise has been about mitigating chaos. A freefalling stock market _and_ overwhelmed hospitals would cascade badly. Any lives saved was a byproduct. For better or worse, agreed or not, the US' gov diverted - for now? - an implosion. The Fed can't eliminate risk. It also can't guarantee future returns.
      - eanzenberg 6y ago
        False, most of the stimulus went to 1) direct payments to the bottom 90% and 2) small businesses with less than 50 employees.
        Supermancho 6y ago
        That was a later program. You're misunderstanding because he used the word "stimulus". There were multiple rounds. The first, was a huge corporate giveaway.
  - deleted 6y ago
    [deleted]
  - eanzenberg 6y ago
    Wall st is extremely cutthroat, in that if you stagnate 1 quarter kiss your market cap goodbye. Loom at the R&D budgets to judge if public companies are still innovating.
JKCalhoun 6y ago
I feel like there is a decade of guillotines in the future that they are either not seeing or are looking way past. But then I've always been cynical about the growing divide between the uber-wealthy and the other 99% of this country.
- lotsofpulp 6y ago
  Guillotines might have worked well in the past, but with modern weapons and technology, you can use a much smaller portion of the population to suppress a much larger portion of the population. You can pay 10% of the population well enough that they support the top 0.01%, and the top 10% can pay the next 20% to 30% well enough or provide a sufficient probability to move up (or illusion) that they are incentivized to help suppress the remaining 60%.
  - hnarn 6y ago
    Also known as the "Tyranny of the Majority". https://en.m.wikipedia.org/wiki/Tyranny_of_the_majority https://en.m.wikipedia.org/wiki/Tyranny_of_the_majority
  - chrisco255 6y ago
    Uh, you can't just pay massive numbers of the population without the wealth creation in the first place. We do not have some centralized salary authority that pays people based on loyalty to some arbitrary payment distribution scheme. This is completely contrived.
    - lotsofpulp 6y ago
      It doesn't need to be centrally managed, the situation can emerge organically just based on how people are incentivized. Especially with the impact computers and scaling at low marginal costs has and how much more one person's labor can be worth compared to another person's labor.
  - DSingularity 6y ago
    Oh how splendid.

by bb2018 6y ago

chiefalchemist 6y ago

It's all about risk vs return. Furthermore, in the current environment of high adversity, and increased scarcity there will eventually be innovations. Some of those will translate into products and profits.

TAForObvReasons 6y ago
The problem is perception. Stocks are increasingly seen as a risk-free play, backstopped by a Fed that will take drastic action if prices fall. In that world, why bother innovating? Why bother investing in innovation when the risk-free play has a huge positive expected return?
- chiefalchemist 6y ago
  Because the Fed isn't there all the time. Under normal circumstances, you can't just sit there. Aside from competition, you won't retain quality employees.
  - hannasanarion 6y ago
    But they are now, and that's what matters. When prices fell the first time, it didn't even take a week before the government passed the largest stimulus ever, 80% of which went to corporations. Investors know that the government will do anything to underwrite their risk.
    - chiefalchemist 6y ago
      Nah. That doesn't guarantee a return. It might mitigate the downside but there's still risk. No one takes on risk to break even. You invest for a return. Stopping a slide yesterday has little to do with getting a return tomorrow. The future. New products. New ideas. Etc. That's where a return comes from. Not the Fed.
      - deleted 6y ago
        [deleted]
    - dharma1 6y ago
      The mandate of the fed is to have maximum employment and price stability. With the impact of social distancing to businesses there was no other alternative to protect employment rather than fed buying securities so the govt has funds for fiscal stimulus to prop up employers that might otherwise go bust (and may still). The stimulus is intended to protect jobs and livelihoods, not to react to movements in the stock market (even if the current president seems to think so)
      - chiefalchemist 6y ago
        Agreed. The entire exercise has been about mitigating chaos. A freefalling stock market _and_ overwhelmed hospitals would cascade badly. Any lives saved was a byproduct. For better or worse, agreed or not, the US' gov diverted - for now? - an implosion. The Fed can't eliminate risk. It also can't guarantee future returns.
    - eanzenberg 6y ago
      False, most of the stimulus went to 1) direct payments to the bottom 90% and 2) small businesses with less than 50 employees.
      - Supermancho 6y ago
        That was a later program. You're misunderstanding because he used the word "stimulus". There were multiple rounds. The first, was a huge corporate giveaway.
- deleted 6y ago
  [deleted]
- eanzenberg 6y ago
  Wall st is extremely cutthroat, in that if you stagnate 1 quarter kiss your market cap goodbye. Loom at the R&D budgets to judge if public companies are still innovating.

JKCalhoun 6y ago

I feel like there is a decade of guillotines in the future that they are either not seeing or are looking way past. But then I've always been cynical about the growing divide between the uber-wealthy and the other 99% of this country.

lotsofpulp 6y ago
Guillotines might have worked well in the past, but with modern weapons and technology, you can use a much smaller portion of the population to suppress a much larger portion of the population. You can pay 10% of the population well enough that they support the top 0.01%, and the top 10% can pay the next 20% to 30% well enough or provide a sufficient probability to move up (or illusion) that they are incentivized to help suppress the remaining 60%.
- hnarn 6y ago
  Also known as the "Tyranny of the Majority". https://en.m.wikipedia.org/wiki/Tyranny_of_the_majority https://en.m.wikipedia.org/wiki/Tyranny_of_the_majority
- chrisco255 6y ago
  Uh, you can't just pay massive numbers of the population without the wealth creation in the first place. We do not have some centralized salary authority that pays people based on loyalty to some arbitrary payment distribution scheme. This is completely contrived.
  - lotsofpulp 6y ago
    It doesn't need to be centrally managed, the situation can emerge organically just based on how people are incentivized. Especially with the impact computers and scaling at low marginal costs has and how much more one person's labor can be worth compared to another person's labor.
- DSingularity 6y ago
  Oh how splendid.